We won our Olympic bid. Here I look a gift horse in the mouth.
So Brisbane won the right to host the Olympics. Up you go Brisbane. Well done.
But, we do know that hosting an Olympic games costs a lot of money these days. Is it really worth it?
Now, I don’t want to be too much of a wet blanket, but I will make a couple of points:
1. The Olympics are expensive…er
It costs a lot of money to put on an Olympics. Tokyo is set to cost $28 bn! A bit of that is due to the Covid kerfuffle, but most of its not.
It just costs a lot of money
2. It always cost more than you think
When Tokyo won the rights to the Games back in 2013, they said it would cost them $7.3bn. It’s now $28bn.
We can call that a miss.
And not to say that politicians are always hopeless at estimating how much things cost, but a recent study by the University of Oxford’s Saïd Business School has found that every Olympics since 1960 has run over budget, and the average over run was a whopping 172 percent!
But I’m sure Brisbane will be different.
3. Only one Olympics has ever ‘turned a profit’
As business, Olympics aren’t great. They earn money through television rights, but these are typically a fraction of the costs.
The one Olympics that did make money was The Los Angeles Olympic Games in 1984 . And the only reason for that is because when the bidding opened to host the event, Los Angeles was the only city to express interest – the previous three Olympic games had been overshadowed by negative experiences – terrorism in Munich in 1972, colossal cost overruns in Montreal in 1976, and boycotts in Moscow in 1980.
LA said they’d do it, but only if they could use their existing infrastructure, and that kept their costs down.
Brisbane has said that 80% of the venues are already in place, so maybe that’s encouraging. A lot of cities have been saddled with white elephants.
Beijing’s “Bird’s Nest” stadium was built for $460 million and requires over $10 million every year to maintain and remains mostly unused. most of the facilities built for the 2004 Athens Olympics contributed immensely to the Greek debt crisis. It took Montreal until 2006 to pay the debt from the 1976 Games!
4. The other benefits are vague… and questionable
In the absence of profits, host cities talk about vague benefits like “being put on the map”, “becoming a modern city” etc. These things are nice, but how much are you willing to pay for them?
The QLD premier says the Olympics will generate $7.4bn and create 120,000 jobs, but those numbers are pretty rubbery.
Academics from Victoria University’s Centre of Policy Studies undertook an economic assessment of the 2000 Sydney Olympic Games and found that not only did the Games reduce Australian household consumption by A$2.1 billion, they also failed to increase employment or meaningfully boost tourism.
The benefits can also be patchy, creating winners and losers. Dr Joan Carlini, a lecturer in the Department of Marketing at Griffith Business School, analysed the impact of the Gold Coast Commonwealth Games. She says:
“Sports fans don’t act like leisure tourists. They are not buying coffees in shopping precincts. What we also found in our study of the Commonwealth Games is that a lot of locals left town during the event. Businesses got a double whammy in that they didn’t get the normal local trade and they didn’t get the tourism trade.
“There were lots of businesses in the Gold Coast that had to close [during the Commonwealth Games] because they didn’t have access to their location. You don’t hear those stories. The Gold Coast has a lot of small-to-medium enterprises, rather than large corporates like the big cities. In many cases, these were family businesses that have been affected severely.”
5. It is a good excuse to do infrastructure
A lot of the benefits of hosting the Olympics comes with the modernisation of infrastructure that’s required.
Now it’s true that you don’t actually need to have an Olympics to modernise your infrastructure. You could just do it.
But tax-payers seem to be willing to fork out for it when they feel like they’re city is on show to the world.
Brendan Lyon, partner with Infrastructure & Projects Group at KPMG Australia, says
“A burning platform is a really good way to focus everyone on the outcome, and something like an Olympic Games is a much more positive burning platform than having a genuine crisis.”
So I dunno. What do you reckon? Do you think it will be worth it?
At least we know it will probably be a lot of fun.